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easiest way to understand them is as a legally binding contract between a public sector
entity and a private company called the concessionaire. In any PPP, the partners agree to
share some portion of the risks and rewards inherent in an infrastructure project over a
defined time period.
sharing structure is more narrowly defined. PPPs in the UK refer to agreements where the
private sector designs, builds, finances, operates, and maintains an infrastructure asset
for a pre-determined period of time (known as DBFOM). In exchange, the public sector
makes a recurring payment based on the condition of the asset. Deductions can be made
for poor performance; also, the public sector can allow the private party to collect tolls or
fees generated from the project.
can mean anything from the highly integrated DBFOM model to simple arrangements
where the private sector takes an active role in the design, engineering, and construction
of the project (also known as Design-Build).
spectrum. They can even choose something in between, depending on the government's
appetite for risk. Depending on the particulars of the infrastructure asset, local political
restraints, existing contractual obligations, financing costs, or other limitations, a public
sector agency may choose to engage with the private sector on only a number of issues.
For example, in the case of a school that has an existing contract with a custodial union,
they may form a PPP to design, build, and finance the school, but not to maintain it.
the University of Kansas. We were engaged by Edgemoor Infrastructure & Real Estate,
the private developer who was selected to enter in to exclusive negotiations with the
University to design, build, finance, operate, and maintain the project. The project
consists of:
rooms, and a dining center
upgrades